Jim Zellmer's View from Madison

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Monthly Archives: September 2011

If you have a few minutes and three buckets try this experiment. Fill one bucket with ice-cold water, another bucket with room temperature water and the third bucket with hot water. Then, place one hand in the cold bucket and your other hand in the hot bucket. Give it a few minutes and then put both hands in the room temperature bucket. This is a harmless and fun way to confuse your brain. On one hand (pun intended) you’ll perceive the water as being cold and on the other hand (again, pun intended) you’ll perceive the water as being warm. The reason is obvious – we perceive the room temperature water relatively.

Turns out that the same is true when it comes to how we assess physical attractiveness. And that’s what I want to talk about here.

In a series of studies done back in the 1980s, Douglas Kenrick and Sara Gutierres asked participants to judge average-looking women after being exposed to pictures of other women. Here was the catch: for half of the participants the other women were unusually beautiful and for the other half the other women were average looking. They found that the participants who were exposed to unusually beautiful women judged the average-looking women “significantly uglier.” In other words, the knock-out stole the show.

Here’s a great chart just released by the International Monetary Fund. Note that almost half — 47 percent – of the US$14.7 trillion U.S. federal government debt is held by the Federal Reserve and the government itself, such as the Social Security trust fund. Add to that the 22 percent foreign official holdings (mainly central banks) and almost 70 percent of the debt of the U.S. government is held by non-market/non-profit oriented investors. Stunning!

Men hate to shop. It’s a truism that Bud Light ads have hammered into us for decades. Ikea has absorbed it, too, and come up with a novel solution in its Australian stores. It’s launched a special in-store area called Mänland, a kind of daycare where husbands and boyfriends can hang out with their own kind (i.e., other Cro-Magnon morons) while their wives and girlfriends shop. Judging by the video below, this makes everyone happy—particularly the guys, who don’t seem to mind the suggestion that they’re essentially imbecilic toddlers who need to be dropped off and picked up like they’re still in preschool. The area is even modeled off the actual Ikea toddler-care area—and women are given a buzzer to remind them to collect their significant other after 30 minutes of shopping. (Instead of arts and crafts, the guys play foosball and Xbox games, watch sports, and eat free hot dogs.) It’s a nice little PR gambit, and it got lots of play in the Australian media—and would surely be a hit in the U.S. too. Because really, the men aren’t needed until the assembly phase anyway.

However, some eurozone finance ministers hit back at Mr Geithner’s comments, questioning the usefulness of his visit.

“I found it peculiar that even though the Americans have significantly worse fundamental data than the eurozone, that they tell us what we should do and when we make a suggestion … that they say no straight away,” said Maria Fekter, Austria’s finance minister.

Sweden’s Anders Borg said: “we need to make progress, but it’s quite clear the US has a big debt problem and the situation would be better if the US could show a sustainable way forward.”

I don’t know if I’ve heard anyone say this and I am not quite sure what I think about it myself, but one way to view the economy in the Information Age is that the returns to specialization are falling.

So, those who like such things can go all the way back to Adam Smiths pin factory and think about all the tasks involved in making pins and how each person could become more suited to that task and learn the ins and outs of it.

However, in the information age I can in many cases write a program to repeatedly perform each of these tasks and record every single step that it makes for later review by me. The individualized skill and knowledge is not so important because it can all be dumped into a database.

The realization that the American health care system must simultaneously decrease per-capita cost and increase quality has created the opportunity for the United States to learn from low and middle-income countries. “Reverse innovation” describes the process whereby an inexpensive innovation is used first in countries with limited infrastructure and resources and then spreads to industrialized nations like the United States.

The traditional model of innovation has involved the creation of high end products by companies in industrialized nations and the spread of these products to the developing world by adapting them to function in low and middle-income countries. Reverse innovation reverses the direction of spread with the United States borrowing new ideas and products designed for less wealthy countries in order to deliver health care more efficiently.

Resource challenged low and middle-income countries are different from the United States in at least six ways that can serve as catalysts for such reverse innovation: 1) affordability, 2) leapfrog technologies, 3) service ecosystems, 4) robust systems, 5) new applications, and 6) the absence of intermediaries.

Germany is the world’s #2 exporter, very close behind China. In 2010 it exported a total of 960 billion euro, amounting to 42% of its GDP. Its trade surplus came to 153 billion euro, almost 7% of GDP. Impressive stuff, no doubt, and an achievement that Germans are justly proud of.

But, not all surpluses are created equal… 35 billion of that surplus, a whopping 23%, was accounted by just four countries: Italy, Spain, Greece and Portugal. Yes, to a very large extent the PIGSs’ munching at the trough was what kept Germans working in their factories. And if you just add France, another country that is currently screeching towards the borderline of fiscal probity – at least according to financial markets – the numbers get even more interesting. Germany’s PIGS+F trade surplus jumps to 64 billion, a full 42% of Germany’s entire trade surplus. In GDP terms (trade surplus is GDP-additive), PIGS+F surplus accounts for nearly 3% of Germany’s economy.

The rest of the euro zone is losing patience with Greece. German Finance Minister Wolfgang Schäuble is no longer convinced that Athens can be saved from bankruptcy. His experts at the Finance Ministry have been working on scenarios exploring what would happen if Greece left the euro zone. By SPIEGEL Staff.

Herman Van Rompuy is an influential man in Europe. He is already president of the European Council, the assembly of the European Union’s heads of state and government. Soon he will also serve as the chief representative of the euro zone, if all goes according to plan.

Van Rompuy’s new role as “Mr. Euro” is a highly prestigious position. German Chancellor Angela Merkel thinks highly of the unassuming Belgian politician, who conceals a propensity for toughness and efficiency behind his seemingly humble appearance.

The next time your great idea at work elicits silence or eye rolls, you might just pity those co-workers. Fresh research indicates they don’t even know what a creative idea looks like and that creativity, hailed as a positive change agent, actually makes people squirm.

“How is it that people say they want creativity but in reality often reject it?” said Jack Goncalo, ILR School assistant professor of organizational behavior and co-author of research to be published in an upcoming issue of the journal Psychological Science. The paper reports on two 2010 experiments at the University of Pennsylvania involving more than 200 people.